GrafTech International (EAF) 6 Aug 222022 Q2 Earnings call transcript

Company Profile

Participants

Michael Dillon	Vice President, Investor Relations
Marcel Kessler	Chief Executive Officer and President
Jeremy Halford	Executive Vice President and Chief Operating Officer
Timothy Flanagan	Chief Financial Officer, Vice President Finance and Treasurer
David Gagliano	BMO Capital Markets
Curt Woodworth	Credit Suisse
Arun Viswanathan	RBC Capital Markets
Alexander Hacking	Citi Investment Research

Call transcript

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Operator

Good morning, ladies and gentlemen, and welcome to the GrafTech Second Quarter 2022 Earnings Conference Call and Webcast. At this time, all lines are in a listen-only mode.

Following the presentation, we'll conduct a question-and-answer session. [Operator Instructions] This call is being recorded today, Friday, August 5th, 2022. I would now like to turn the conference over to Mike Dillon. sir. ahead, go Please

Michael Dillon

and morning, call. to are On Officer; Operating Chief Good Marcel Financial and a results sales and quarter Marcel International's with details. will matters. begin other discuss with XXXX which comments Executive will Officer; Chief review close Halford, outlook. earnings opening financial with few will Tim on Jeremy Flanagan, after and will comments, Jeremy you. Chief GrafTech Officer. welcome second Kessler, Tim safety, Thank me operational quarterly our our today Marcel

open then will the We call to questions.

next Turning slide. to our

As matters other could subject and uncertainties. may things, to call actual here. some those current statements a among and to include risks indicated results forward-looking by trends on reminder, are These are strategies. of discussed on statements cause shown differ and that performance, regarding, Factors materially are the forward-looking from statements based this expectations

certain relevant these discuss and non-GAAP measures, also reconciliations. will non-GAAP We financial the include slides

Investor find our website. www.graftech.com. will call on slides available You these the be now also Relations in turn Marcel. replay section of over A the I'll website call at our of to the

Marcel Kessler

I we well-positioned distinctive the the have future. deliver foundation value Good you our me quarter in personal graphite and in lead I a company to I for evolution. confidence was call. have market growth the a that growth opportunity potentially everyone. You, shareholder to set other give second are the joined a morning, through and of excited to because of note, long-term. the the in Starting this joining electrode our pursue on to I attracted avenues am and assets important phase to participate time, Thank of earnings that of I capabilities its see have Mike. promising to at Thank to over GrafTech GrafTech ability believe am next honored

to dedication. energy weeks I'm get the few by know-how, our GrafTech, to know I've impressed at of opportunity and associates and had many of very my During first level their

Turning to quarter. second the

delivered We and economic to despite period the by have are the pleased results challenges geopolitical on brought conflict uncertainty. in

ability our the a and and I thank Jeremy operating execution call comparable competitive levels to to would I Our team turn testament update safety, on key and work. financial the to prior over operational is like for advantages. year operational GrafTech sustain to will their hard performance. entire an for now sales to metrics

Jeremy Halford

a and good Marcel continues comments the excellence, in which start of overall remain this industry. broader morning, is at that the Thank our important GrafTech place in to as are asset. a people safety I'll you, core my operators encouraged on We area quartile manufacturing top performance with in update everyone. most value health and us brief our

year-to-date rate of we not our However, compares this second quarter past reportable satisfied unfavorably the end through to years, the result. and are the incident with two

fundamental Going safety forward, that continue and must that we do safety be emphasize we prioritized. to be key initiatives to everything must will

safely home toward remain goal of in our will employee every day. every We ultimate working steadfast sending

Turning to slide five.

remain utilization XXXX. performance a quarter second X% in steel provide to me in China, past excluding average the capacity as same quarter the compared global Let with also points industry the few production, rates declined the declined, our lower second line on period several steel years. for for Global with industry results. data in that production, context Commensurate but

compared steel Conversely, shown such softness Ukraine among by that and things, diverging remain increasingly market geographic Europe, rates evidenced steel the We the steel more economic This to regions. has other reflecting, between elevated impact as markets utilization Western different U.S. the as the of and supply in global industry. are in trends Russia. seeing industry chain resilience includes conflict

six. slide on starting performance, quarter second our to Turning

of sequentially, X% Our reflecting levels tons and sold impact our in decline both of the the metric production volume to utilization. capacity a plants at year-over-year of tons Ukraine/Russia slight quarter, operate second electrodes We metric high conflict. XX,XXX volume year-over-year continue quarter increased graphite to as the XX,XXX representing

with the ton. metric XXXX, quarter with quarter of increase represented quarter over we tons were shipments was comprised non-LTA in Our metric earnings price per first of $X,XXX XXXX a of electrode metric on price provided average second a sold XX% expectations second consistent pricing weighted call. the average at our of non-LTA $X,XXX line sales under metric at XX,XXX a and the weighted per of our and quarter XX,XXX ton This realized realized of LTAs tons first

shift a sales slightly year-over-year other impact mix the quarter. This the the proceed foreign increase pricing, our pricing net and realized were partially had non-LTA non-LTA reflected to of offset denominated Net as by expect reflects dollar pricing during of a sequential these half and year, decline in unfavorable for FX the be in on strengthening the through weighted in to a and second the euro As This primarily the portion overall non-LTA U.S. LTA the an in of the from Japanese second half to XXXX. higher yen, first of performance of quarter comparable currencies. the quarter volume. representing also versus XXXX. well $XXX our are business, our we as the compared the sales we second second as to million, sales remainder average XX% sales

bottom line more COGS However, is in headwind line spending to the related a FX the than by European euro denominated to benefit on offset top our operations.

financial the Tim rest to over cover it turn now our of me details. Let to

Timothy Flanagan

Thanks income and second per the both on or $X.XX the to share totaled call. quarter on adjusted a Jeremy of in morning Net GAAP million earnings everybody $XXX basis. and good

compared XXXX, the as Adjusted Second decrease margin the offset quarter EBITDA in quarter. was in a increase higher adjusted the net of million, was EBITDA $XXX of X% year-over-year quarter second second XX% costs to sales.

costs. inflationary which by particularly materials, is for our key briefly With Europe, to in higher certain Specific to on acute expand and prices. the impacts energy nearly significant are other driven business, to impacted continue raw most me we take freight. all pressures, Let global by our industries, energy a be minute

second quarter, year-over-year ton, and to X% the we depreciation amortization. first compared metric of excluding represented XXXX. of For sequential a and increase quarter increase recognize a the approximately per COGS This XX% experienced

the We discretionary expect sequential and cost similar quarter. a inflationary rate to as inflation continue being third persist our we on we the managing focus in environment. said, at prudently operating That navigate current spending, to

outages quarter, of of working XXXX, well upcoming of cash just quarter reflecting facilities capital. as decreased increase oil. This measures inventory, in higher in cash quarter production flow. Also planned second as million outpaced third the cash outages to In million flow. adjusted coke in to as of by and our the I spoke working the Seadrift XXXX. reflecting higher to, facility. during was quarter driven of the European Both sales cost generated impact first Turning refineries free we second $XX the quantities occurred operations of oil and electrode certain capital advance volume $XX in both from an compared our Inventory anticipation second higher of at half decant builds that production needle supply

on-hand customers for response were to to global Additionally, actions needs Ukraine, to are second enable in market to materials that uncertainties in the our our meet levels. the manufacturing raw disruptions the certain increased stock quarter safety the in taken essential typical early quantities related our chain. conflict proactively to electrode in supply of were us current supply despite These above the process

we chain and supply our continues to As third anticipate we visibility through in proceed we half the move the build unwind back quarter beyond as the of as outage beginning the to windows inventory in increase, XXXX. the

slide resulting term during of in eight. We million $XXX a to second quarter, on year-to-date strengthened our with balance $XX Turning total debt a in further million the a reduction our basis. loan sheet paydown

at June debt-to-adjusted Our X.X as the of times to ratio compared end XXXX. was XX times of EBITDA X.X

quarter, amendment $XXX million facility, $XXX with we our to of increased the We capacity the for an revolver. ended million, million. of liquidity During cash million consisting of $XX the million second new capacity $XXX revolving approximately our under executed $XX total of borrowing total by and a quarter available credit which

Now reducing returning continued priority. includes on sheet our flexibility capital strengthen business. our strategic balance prudent to allocation This slide investing strategy stockholders our on further our capital disciplined a to while also Maintaining to a support and nine. debt in focus and remains a and

we through $XX repurchase available second repurchased under quarter, XXXX. ended a in our stock During $XX the first million million remaining repurchased quarter common the resulting our the of with stock, million of program. $XX of We half total

In XXXX the range in capital addition, $XX $XX continue our expenditures to to to million. of be million we expect

that low assets the in cost long-term. steel moves the we to production, the EAF-based will growing meet demand towards high industry over will our create As operating global quality, the continue to shift invest more

prioritizing managing highest on those remain projects with spend, will our We in prudent the return CapEx investment.

to outlook. perspective Marcel his Now, on let me for it turn the back

Marcel Kessler

Thank you, Tim.

is for As the sectors in and highs both at the industry most steel time, this same excluding steel the Global environment China, the declined the steel from compared operating XXXX. for recent volatile. in have case second X%, to period global remains point year-to-date retreated prices manufacturing-based production, quarter in and

see as such to the we geographical States resilient. As softening certain been Europe, markets such in steel regions, more in while we're as indicated, diverging Jeremy other trends industry United continue has different Western markets

our and to to we near-term To well with higher the these reducing continue raw impact our LTA becoming debt. energy For of At ongoing to long-term strengthen logistics time, on the GrafTech, the capital prudently and as capabilities, will shift from mix and of between conflict is ahead continues. near-term operating as challenges, manage in get Russia challenging material, same continue the expenditures, outlook non-LTA focus business we costs, Ukraine. more and commercial the

remain continue the the in optimally to capacity furnace efforts method further excluding lead growth result arc XXX capabilities steel term To also planned participate electrode of the accelerating tons positioned will growth to in industry over longer product across incremental that decarbonize for our metric graphite that We electric by electrodes. to to confident could graphite driving be of announcements in electrodes. We is industry will demand additions by globally, producers invest graphite and demand steel to annual demand XXXX. China, [ph] EAF the steelmaking, point, in for service

industry, in electrode positive graphite supports leader our business. outlook this a our for the As long-term

to pricing used demand higher positive another [technical will coke. long-term material rate difficulty] key of for accelerate also in needle petroleum a coke business batteries demand for continued anticipate the raw as our needle needle growing We trend result for the for coke, as petroleum

integration Our our vertical via graphite to into coke production electrodes. our high for quality foundational ability reliably Seadrift's facility is petroleum needle deliver

are the long-term. over committed value our deliver sustainable advantages confident these remarks. shareholder in our and strong That competitive With and team, the ability concludes to we prepared

call We will the for open now questions.

Operator

session. question-and-answer Please the Thank Ladies you, begin and Gagliano David we from Instructions] question of sir. Your go BMO. gentlemen, first [Operator ahead. now will comes

David Gagliano

Hi. questions. just for Thanks questions ask my a a type on taking wanted near-term. to clarification first, few I the of operational just

believe of the in market versus on the second was First commentary comparable pricing, the first all, spot I half. half pricing

lead I nine-month there's lead but think the historically about a it. commentary time to was the associated in to historically, prices obviously half. six with continue And spot, recent to second commentary expectations was or for improve times the there's

-- you color seeing being now prices. little now just believe at market? I is signed that more dynamic or Can or flat, volumes -- -- in being right because the So recent the that a being spot comment you're more the signed pricing being give contracts on so lower

Jeremy Halford

and of appreciate your different given this a to diverging factors, regions. dynamic that work impact a most average. I in Dave, notably, we're Really, talking world going the been question. forces energy Ukraine/Russia market it's that things Yeah. are recognize here prices, lot that economy anticipated And comes having pretty on And pricing down has is we're situation the about and macro what's just important variety the to the there's that's a and seeing on of in Sure. that that global some regionally. Thanks

variety essentially, softness regions this we is manifesting discussed a others. in itself is what's And that As and the in certain resilience some in remarks, softness happening continued seeing we're in those ways, or extending times power during different due operations in high peak steelmakers, that costs. Europe certain by announcements power to including planned summer they're of particularly avoiding outages their they're

earlier. are short-term, in reducing having on applying increasing in rates pricing And at that inventory these anticipated the is certain pressure consequently customers, operating reduced regions what particularly we in and beyond of electrode certain impact ultimately some demand Europe, the downward so had

anticipating. really a has that price this escalation also previously So, FX limited the is It's of worth role were some noting that here. playing we

yen. relative pretty As you in the the know, we've run-up euro And Japanese value and in report seen we to USD. a the dramatic

that having on so, it's currency And a that don't -- price is sales some in yen, to in short-term in anticipated don't necessarily But into basis. I translate given reported that, price impact. our that those said contracted euro of report local this and increases on note sales are USD important increases a think we

on industry Over EAF borne the decarbonize. the being in the of that years. is remain undeniable, very medium for process our announced globally we to we term core the various believe markets. coming bullish The have steelmaking and long-term, out EAF help new value And that's and projects the been that proposition

our and in during to As electrode over XXX,XXX that And timeframe. believe in require EAFs the through that supply the monitoring our through to Marcel product vertical projects tons dynamics really favor. we're going time technology, XXXX, period is demand and new Seadrift proposition will furnaces value noted, and latest -- a electrode efficiency our these lot through shifting of to technology, stability promise going our in are generate high of greatest our integration to incremental we our be support these ability these XXX that market EAF of through new

David Gagliano

half can the Considering for volume Thank the specifically speak in year? at will in you situation take demand now, How this or obviously, half just of and in weaker meaningfully third second to answer. volumes the on Historically, low quarter near-term. second GrafTech environment. sounds you to GrafTech Okay. has -- been volumes expectations? half the reducing second And its that of more cautious leader terms That's commentary, follow-up a it in a points helpful.

Timothy Flanagan

Thanks Dave. Appreciate Yeah. it.

year is half LTA those year conflict some the volume. in talked or manner. if we profitable sales. because full alluded Ukraine, have non-LTA tons side against of contracted As year, and commentary obviously, the out a on guess, in impacted the always we question have as in second at replace look to provided on in I volumes, full the the half to And about I of book to to pretty the the the for the well. talk the certainly our think deliver about efforts our we order We the and we've becomes, the the of the back come otherwise guidance of those

of we'll head of looking So, as our profitable. But as at basis half year profitable, the demand, at as the and well. that as standpoint, certainly, to on escalating into the And year. that make quarter an order-by-order we Europe, end continue as we'll sufficient those make the to year inventories to an many back And as we'll first of from on-hand have we the match electrode long look we next the in tons sure ship we they're we that to costs we're the graphite sell as tons as can production operational at end sure of continue sales -- the right? year in

David Gagliano

Okay.

the last volumes challenging I to together, is, volumes were you reasonable there, look below. last to some band? in went XQ, back specifically, XX,XXX for that tons -- Obviously, XX,XXX that If XXXX, times to XXXX, what's XQ in Is within XX,XXX, to zones when be somewhere there's year. but it XX,XXX those whatever put reasonable? two So, down all back

Timothy Flanagan

been, we've certainly with more the No, I would what in the we be back quoted to the even in line year. expect as you down or to not where would think of that to year saw level we half last we XXXX look going

David Gagliano

helpful. me. And one then one That's Okay. just last you. Thank for

updated obviously, on market down. meaningful great. And longer the any term, XXXX, a is And the we're of negotiations along the months, beyond. happening doesn't actually wind lines from away there sound four thoughts the months What's those extending LTAs? from and -- closer, on five Just the the end XXXX getting for

Marcel Kessler

for that question, Dave. you Thank It's here. Marcel

all, of GrafTech that a long it's LTAs. before providing So, electrodes any entering point maybe, to graphite for has into out first very important time been

change. this to fully prepared we're So, I think, handle

Now, a hedging be surety a multi-year with portion and a our a we play our in locking portfolio. our And our and will continue they of cash customers role mechanism to there believe providing supply in is while us, flow. that of for can win-win for agreements that customers

as our think, tailored offer look their will we to to of I customers So, we contract a here, terms needs. move variety forward

have discussions have question, year. your place to expect of to we'd some and Specifically this into some already, so multi-year had with and we year agreements in the end customers next new by

the us needs Now, market of pricing based current that they be consider conditions that both new at structures are of a time in would the customers. expect to they're we and general, into, the agreements that entered variety suit we although those may our on

is that offer will commercialization important to of continue will make we an agreements that it the they our up anticipate as while strategy part portfolio However, multi-year and proposition, value not to we important forward. note majority our do of moving

David Gagliano

Thanks helpful. very That’s Okay. much.

Jeremy Halford

Thanks Dave.

Operator

of Your Woodworth next ahead. Suisse. Curt Credit question Please comes from go

Curt Woodworth

Yeah. Thank you. Good morning.

Jeremy Halford

Curt. Morning,

Curt Woodworth

to respect on basically like third with seems pricing the and roughly the quarter, flattish you're guiding volumetrically, non-LTA. same it So,

perspective, in cost to you then see about So, outage through progression going sequentially your quarter? in so how an on can you're talk have you outage from coke then buy have in price third-party assume -- tend assume as an talked merchant can cost a inflationary at be to pressures top And you I Seadrift, would of You And then, that to have the coke. would I you that. well. going more up the

quarter? through help us gauge you those a So, moving the can to better on some bit just Thank third of get walk little pieces you.

Timothy Flanagan

there's I questions to points six all. for hit sure Yeah. would try that. or in think I But make there. Curt, about No, thanks, them And I

do folks take during then, holiday certainly, a maintenance work in repair with time. lot major do a we a operations our and activities activities. and outages, turnaround lot annually, European maintenance and that are periods the we down to over We our also at So, coincides our of of biannual as these relates down Seadrift. Europe Seadrift, this for it planned And and

our graphite prepared customers not twofold. I also on as have back supply coke the to that done One, remarks, sufficient we electrode quarter, to in continue will. But was we in the produce making sure to had to the certainly. the the quarter we disruption build of that that So, half commented you sure throughout third third ship have then our on-hand needle had inventory any make and in if we inventory

of in our our And So, is cash in you continue of results that if that to work flows, we'll back already year. through and a half the will. then lot the down

the On certainly, and cost to side, continue forces yeah, have will inflationary us us. impact impacted

at really looking in of a driven areas. were of it's line to sequential couple we're X% cost QX. think I roughly key And where we increase with QX on

all, in Overall, energy power costs right? relatively small our a of of fixed overall Europe. we're of European First is and price, largely portfolio piece

on the For where four megawatt probably has the last it's on in energy, of we're Europe a sitting hour right Dutch megawatt if a the side, But from the the volatility now, swung gas at you the market XX% over to gas fixed TTF side. €XXX at fixed XX% power at look $XXX hour today months.

logistics pitch have pitch to conflict the markets part in The with an need, continued gone to element wild it a key as the with oil our in increase. up. that and into manufacturing think that that that QX. of Brent, the and much even raw the impact European is, locked again, have have those supply of in market of certainly, on materials. QX having And are over We we if in about And Ukraine supply while a that swings off we and hedged, we've results. disrupted mentioned So, certainly associated an latter pitch, and which going the electrode. those Brent and have Decant pricing trades stabilized spread chain we

XXX% inflation in elevated North or decant what particular, despite think, side. all-time cost, point logistics our can't and And commenting vice of can't elevate certain pricing So, America your we then over need, affects an hedges, on some to last and hedge I continues on is that I for still decant logistics to of right? hedge and at. we're Brent low. cost seeing us reliability remains Europe to routes is that remains that spread guess, we logistics, versa, traded at and the

And around So work we headwinds we're -- of that And of we And mitigate bit coke. can. continue which the are or import the facing, of $X,XXX a if reference point. we your a $XXX I'll I on ton those side, is are reference that dated, you're high-end. $X,XXX the that just at just think I a call to coke they but needle cost remind a think last month calls. the was needle little third-party they are at again, trading a But these color often statistics maybe or on we so to on to comment a some look up, and on best the question it, ton, range

may continue through seeing increases and be of of in in that's bit little but the kind coke We near-term, plateauing this in at to needle as what point perspective see a here we coke year time. needle we're the the seeing from half So, expected. first a anticipated of

Curt Woodworth

of of petroleum versus piece, And battery. or both between I coke the the then, synthetic interplay coke anode. Great. a lot petroleum lithium-ion in comments even then mix graphite synthetic coke. within the coal made there's and natural the your pitch ultimate Super the debate, tar helpful. mean, -- component And the think, around and combination you on the kind of I

obviously any do have the kind just on the EV have want that you that terms Would saw to long-term into in I evolution PSX market? NOVONIX. with announced of composition market, you of So, getting the we deal the and of interest see, merchant view a

Jeremy Halford

Yeah.

to So, comment that. on happy

to lithium-ion this manganese be cobalt battery I graphite. consumption about case, is phosphate as of cathode, in or when every think nickel as space, -- or that whatever, lithium-ion battery As about a of the it anode the is be we think the needle we driver huge talked chemistry, Regardless you're the I clear whether think coke it's aware. going

we that, sold. megawatt lithium-ion within the increase so And going in going batteries growth that is are into the hours the in we're that an EV drive other to EVs. increase, the adoption seeing as a continuing are see And continued of to that that's batteries the thing amount these of

that it's we is coke, really when that growth telling needle expect XX% what of and we that's annual amount all us between synthetic that so, and market. put of together, now consumed compound being a in XXXX, And in rate graphite consequently the about

is needle able of third-party So, it will be of of -- a our the think exclusively meaningful -- to driver we go given -- vertical need -- on that needle given of coke the coke's forward, to And your we our supportive customers whereas not in proposition that, underlying that to driver of needle be integration. on or surety exploring economics as space But clearly going and is consumption. this in rely be value our kind and the in sources the ultimately me to something that needle a -- we supply coke will -- of to Curt, that to we're point, continue world. our coke Whether that. pardon participate rely electrode increasingly to come offer currently competitors more we our customers is on choose

Curt Woodworth

have. much. That’s Great. I Thank all very you

Operator

Arun from Please of comes question next Your go RBC ahead. Capital Markets. Viswanathan

Arun Viswanathan

for Yeah. Great. question. my taking Thanks

on you earlier far rates. something touching up picking as said kind and that guess as of Just of last line utilization questioning I

just guess, utilization back referenced, so, volume then, Where the potentially you start own in if in be if has to sure you reduction process. are needle that to also that of I'm redirect rates thoughts your rates? capacity Thanks. guys potentially EV on would early coke then some that just but that. utilization the get reduce dial that some So, Europe? the and conscious made market running, your your want you're that different to And to exploration, across on GrafTech able into its just steel you've decisions what given curious, rates you facilities, across And I system? is in and potentially

Jeremy Halford

Okay. Yeah.

So and great Arun. question, thanks,

where So, could historically, starting factories general, we our utilization XXX,XXX in about said as at that of reasonably capacity. rates tons to a our with in expect Europe, discussion got about in XX% of we've we've capacity have operating factories

And quarter. the of of roughly third down for would bit take so that quarter. going in we're There's little to XX,XXX tons say given in a to couple a a seasonality that. weeks that But things

to tell order that we're factories to continuing protect in that right So now our that pretty run hard would ensure customers. you we our

go the we economics our side. factories selling this we're price running we're on forward, to As those decisions make progresses, prudent underlying we'll incremental of monitoring those And ability as continuously to economics the comparing command and and selling tons.

ESG And up of the lot -- on and bit, our a fortunately, of in initiatives if we little go time in dialed focus back so we've really a particular, environmental side things.

facilities now. talking around were Europe doing energy the our I'm but specifically efficiency the right And so, that globe, to we do have of we improve things some about

where the were those or it's return of primarily we of that economic command a for some And now environmental price making generate investments purposes, given pretty and now going. substantial gas

third-party consumption back said we we that do we our produce we factories look given our internal that kind And strong how investments we of ability business, at think potentially about our that how and expect we've will we were get into think world, us well. tons. battery to start the variety places. medium meaningfully to as higher Seadrift to term, some around that the before lithium-ion as buy generating for we financial needle is so, into coke initially made is ability I about question in Coming And from of a -- more will the capacity our about now our your the pretty results from headline that for benefit Seadrift more be then XXX,XXX metric than coke as run -- we prioritize environmental and seeing reasons,

internal does that to us for so while as usage were we if our some internal market, test our to utilize continuing some use some third-party give into decide that to sources strategic get And forward. flexibility of carry that capacity to space of we to that

deeper touched but I go happy points hope to if I So, all you'd your question, of somewhere like. on

Arun Viswanathan

No, And I on electrodes needle get Great. was guess, helpful. markets your to thoughts also in the very that and wanted then, I obviously well. as coke

mean, as So, given some in what's you you some side. Could the macro inventory going And you you on electrode the some impact that think the in on And will last? inventory early utilization in prices noted on spot build of pullback of that that are demand that, pricing. kind build. you also with just kind rates needle that stages and just guess, and comment there's impacted of think needle of in steel on well? in side How we're I market? I long stages if been coke early coke where see the do has causing do the it

Marcel Kessler

here, back to Well, I Arun. one and Marcel Maybe Jeremy I will coke, think. pass on the for it's -- will specifics the comment needle I

earlier about of on reinforcing want this an time. from on is pricing? to at remain the that optimistic business, the And broader we right, fundamentals comments, Just very we long-term in our near-term market, are volatile. does currently in there's the while specifics our reason operating environment uncertainty question cock our more add there XXXX specifically But the why for Jeremy, is providing more needle refrain anything you we outlook will remain

Jeremy Halford

Yeah.

we -- coke statistics on we've seen third-party export the So, I I based about that run-up monitor. Tim in referenced a needle seen prices that import $XXX what we've think, think,

despite even softening we to to been. of the there's affect room think the needle certain levels they're But various where at at from least the in that compared that it elevated historically it, where we for to is look the are now. that and think likely pricing coke that has as of support right factors at we think So, world, the grow going regions current we market

And way would so, being graphite on battery -- lithium-ion demand electrode characterize what essentially, that the up the than I that slowdown on seeing it the side for is we're is made side. any more

continue coke that anticipation to we'll strength our needle so, And the prices. see is in

Arun Viswanathan

ultra make then, using the electrodes? if you Thanks. from elsewhere? in -- innovation coke causing had needle coke performance question China was with coke? other I that electrode any manufacturers extra high any the And Have on I make Has there you've curious Great. market? capacity observations is And to last in pitch supply or to needle maybe the in just Just needle seen there's also been pitch had market. UHPs potentially guess,

Jeremy Halford

Yeah.

another what So, at appreciate question. competitors we're obviously, The look their inside -- I that. and our factory. we as great doing, they're not

coke. petroleum It suitable we looked past our don't process for based coke pitch using process. about the it done, to would thinking within electrode our have amount primarily with some times that doing be done it us a needle could in able and needle don't and to in efficient that ourselves with needle issues UHP able in as based sure and to our drive for was What they're inefficiency of our at a chemistry be manufacturing make pitch accomplish significant what -- manner So, we it have this processing concluded we would given to as think as applications, be certainly not a it but that we're could based coke. know do what

Arun Viswanathan

over. lot. it Thanks turn I a will Perfect.

Operator

Your comes from Research. of next Alex go question Hacking ahead. Please Citi

Alexander Hacking

Good okay. or if three Yeah. follow-up questions, Hi. that's morning. have I two

to cost I in reopening great. guess, makes opening and between differential cost the it Mary's, towards North there side, your a on little footprint are your sense the more St. And there not production that a -- operating shift move even America, is or meaningful volumes So, production differentials point sort where cost the bit, up Europe side, facilities consider is of the Monterrey.

Timothy Flanagan

Yeah.

you appreciate I and the lower certainly, regions our the to differentials right if does on day, at American between prices cost wide North sites, you in operate. have all there's European right, talk Jeremy, those, cost know I'll question. gas, about unique much is than natural all pricing Alex. average. if of of are first portfolio. don't those operating would of we overall European let thanks, Jeremy Europe natural and right now, are Certainly, the part terms American tackle we what look say take of network. So, I well. of disparity then the even there that differentials power At substantially kind And as labor the energy terms the end want I operations. of But than basis, North our in in cheaper to on pose a structure not challenge historic a you the now. see gas And

Jeremy Halford

Yeah. Yeah.

given Europe, as utilization improvement lean you all steel have substantially have in So, probably the anticipated and would Alex, and North opened our team. Tim we rates differences that of of America was this difference up versus continuous that's talking some in about

driver that. can America, We have being those everywhere resources on debottlenecking of North Monterrey, and obviously key a we of all focused in

up So, the focused continue open on extent that incremental That's now. to we to can you're right doing have our absolutely in where resources capacity Monterrey. that right we

pleased St. to graphitization As on the new the Mary's, activities increased that line we complements we've in were I'm And that the you question of up there. the facility place know, of commissioning activity installation at as already with Mary's to and amount grade. in design with ability response equipment that their -- the that machining the St. equipment, ramping point and the that taking your team performance the I actually and would quite run Mary's out they've on St. demonstrated

we manufacturing it arrow access in mind keep so, it obviously Nothing we beyond St. in one forward, to do with with footprint. that to just a but what that way. anything location as quiver as we and plentiful reasonably factor announce put about go the could moment, the our I it we But in going terms to Mary's this. something we continue that to energy, if is we're of strategic that, that's to as explore a need more think priced consider remains And at

Alexander Hacking

I then, on And to on Dave's answer earlier just to follow-up LTA. Thanks. Okay. question your the wanted

current what sure So, as side. be going cost you volume on my would perspective, guess, Would volatility prices can And fixing mean, it similar discussion a old pricing, was be multiple what forward. the terms LTAs years, not not are from you to the I'm probably say how customers sure not be in I'm for fixed of given I in much. lower spot I said on to price these attractive multi-year were? be you going the I But I guess, structure think, ones LTAs certain lot with

color So, more I any guess, the on process. LTA Thanks.

Timothy Flanagan

they're we're a we that our head to we the how the strategic of add relationships. the I'll of that having do I where And load way discussions approaching for that's provided I approach commented lower we book as that Marcel about customers long-term And have that's And feel And Certainly, both that. can -- currently, to for our And companies supply that partnerships long-term that comments those have XX% order think right? fixed as we're to overall earlier. yeah, expect of XX% a it. necessarily customers the option Thanks to strategically, over looking enough a out percentage it think fact it don't last as LTAs with couple disruptions operated on our certainty they book the well as gun good But past, these be the those We those customers have there's with of the without into or are Yeah. mutual value viewing certainty. we've enter in And the of our of right? us we've are for well. certainly price our bit perceived in portfolio. we with a supply. years, a it, more of compelled Marcel seen agreements, be little that order

at look feel a certainly. to as lock both, we but again, mutual to price compelled So, in benefit don't at these any

Gen a LTAs want look that, structures be variety were think, X, or signed them ago could and going you like so. introduced these we that they I feel if to call that not five look years under I agreements, as pricing think of forward, there's whereby may the original

Alexander Hacking

Okay. those Thanks. needle of question, an that which then final obviously, from not for answer. Thanks. a coke, for I it's coke I price that kind that me quite sure kind something investor just wasn't sense. byproduct. because the of question. But relative and making are, or relevant pitch pitch. relative asked it's it's you're -- provide -- interesting coal was not really support needle And the mean, Makes one the needle an cost coke some is for

Jeremy Halford

Yeah.

So, what's I I speculating don't. be to somebody better I the I I want don't don't to would or and you I apologize, answer answer else. that that, if mislead probably Alex, know tried but if to

Alexander Hacking

question. candor. Thanks Yeah. I No worries. for the the appreciate right. All a lot

Jeremy Halford

Thanks.

Operator

Woodworth question Curt a of Suisse. go Credit have follow-up Please from We ahead.

Curtis Woodworth

Thanks. Yeah.

are my to had a this, or the that more under going that I spoke think are I lot higher is you utilize. new One size, planning electric of of that questions And these parks tech lot the XX-inch products, understanding in to the construction of kind is diameter. a larger stage,

you XX-inch is if today? size or how growth you then, Thank are like market kind kind very your is you. that? speak of diameter, to this product -- particular was for size. large speak I of So, And you And wondering just can the all the capability the positioned if how to in could tight of in that one coming how

Jeremy Halford

a in fact XX-inch absolutely The these Curt. electrodes. with are couple many the mostly going on, is we of coming efficiency see and market and still, of fact, U.S. larger lot quite as you're larger Thanks a here that high focused right applications Perfect. in of graphite Yeah. started, The reasonably -- small just furnaces in -- them on

of and space, insulation of think where That's more XXX where As we surety we're those are is furnaces. about in which more of seven we ocean as an where we'll right out the a us lot even electrodes. the super-sized but just the really as our we them seeing or demanding market gives customers well value as into And XXX some of XXXs that the now. that have not become proposition ability electrodes, a larger on as value on like that from product really us seeing of standard we technology, because side the what standard. think the our you're of of or see what a technical those that new the five, lot sell we service, about that's place, value supply XXXs, we're a to a that's XXX-millimeter product We're lot project and we our the the sizes. XX-inch on, basis cost-oriented our give those seeing Currently, six proposition competitors is really depending years, XX-inch where of on for is comes

going is And the to continuing as so, market, XX-inch through talking that the that you're we the mills exactly really and like our as decade, the is, more but Right given we're where about furnace, XXX-millimeter think about that's from conversions balance we'll as as to grow. The relatively still we XXXs electrodes. XX-inch time position on now, super-sized our electrodes of of seeing is be XXXs we'll on becomes grow arc electrodes, that's the of market. the routes more that market, a ready progress integrated XXX heart of to the and of size and we a part steelmaking electric that you're focus right this of the small primary or bigger spend that, part or the

Curtis Woodworth

Great. Thank much. you very

Jeremy Halford

Curt. Thanks

Operator

closing no other back like are conference Marcel to turn Kessler I lines. the remarks. to questions There for phone the would from

Marcel Kessler

thank on this to call in I with to look next for quarter. a forward operator. like interest GrafTech, and would Have you speaking your day. you, great we everyone Thank

Operator

to your lines. like Ladies and would We thank you conference and call please gentlemen, morning. this disconnect does conclude ask that for your participating for you this

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